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Financial Mirror (Cyprus) - - FRONT PAGE -

De­mand for the 6-year Cyprus gov­ern­ment re­tail bonds, a low-tax scheme launched last year to boost state cof­fers, picked up again with the Public Debt Man­age­ment Of­fice (PDMO) an­nounc­ing it re­ceived ap­pli­ca­tions worth EUR 10.71 mln for the third se­ries of the 2015 bonds for March

The PDMO said the is­sue was over­sub­scribed as a to­tal of 57 in­vestors ap­plied for EUR 10,718,400, thus ex­ceeded the monthly tar­get of EUR 10 mln, with the state aim­ing to earn EUR 120 mln a year.

Of the ap­pli­ca­tions, 54 were by Cypri­ots and three by for­eign in­vestors who ac­counted for about EUR 7 mln. The av­er­age value of ap­pli­ca­tions reached EUR 188,042.

The PDMO said that the fourth se­ries of six-year bonds will be is­sued on April 2 and the pe­riod for ap­pli­ca­tions will be March 2-20.

De­mand for the Fe­bru­ary se­ries dropped to EUR 9.4 mln, down from the record EUR 36.7 mln in De­cem­ber.

The 2015 is­sue car­ries a stag­gered in­ter­est rate that av­er­ages 4% over six years and has so far raised just un­der EUR 130 mln for state cof­fers in ten monthly is­sues, as the gov­ern­ment has re­sorted to al­ter­na­tive means to raise funds ever since it was shunned by mar­kets due to the re­ces­sion­ary econ­omy and only re­turned last year.

The gov­ern­ment’s aim was to at­tract about EUR 10 mln a month, while non-EU in­vestors are lured with the in­cen­tive of se­cur­ing a per­ma­nent res­i­dency per­mit.

The Public Debt Man­age­ment Of­fice at the Min­istry of Fi­nance said that the ninth se­ries at­tracted 35 bid­ders for EUR 9,375,600 of which only two were for­eign in­vestors, but they of­fered EUR 7.5 mln, or about 80% of the to­tal value.

Depend­ing on the hold­ing pe­riod, the 2015 is­sue of­fers an an­nual in­ter­est rate of 2.5% for hold­ing the se­cu­ri­ties up to 24 months and grad­u­ally in­creases to 5.5% for a min­i­mum of 60 months hold­ing.

The an­nual coupon rate for the 2014 se­ries started from 2.75% and av­er­aged at an at­trac­tive 4% over a six-year pe­riod, with a min­i­mal 3% in­come tax on the in­ter­est, far bet­ter than the 30% im­posed on all in­ter­est-yield­ing prod­ucts.

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